In an alternate universe, Ron Sheble would retire in his mid-60s and move to Arizona to hike the desert with his wife, living off savings and stock options from his years in corporate finance.
But life works out in funny ways. Since 2013, the 59-year-old Lincolnshire, Illinois, resident has co-owned and operated Advanced Vehicle Technology Services Inc., a company that converts fleet vehicles — think delivery trucks and police cars — to run on natural gas or propane.
Sheble and co-owner David Hagopian, both of whom were laid off from the same corporation, knew little about alternative fuels to begin with. But after kicking in their own savings to start up the business, toiling through a year and a half in the red and growing annual revenue to more than a half-million dollars, neither is ready to return to a desk job.
“We’re going to stick with it,” Sheble says. “The bleeding has stopped.”
Starting a business is difficult at any age, but entrepreneurs like Sheble and Hagopian, both north of 50 when they set out, have specific constraints to consider. Chief among them is time: Older entrepreneurs have fewer productive years ahead to make up for the lean times that virtually all new businesses experience as they gain footing.
People in their 50s also have different financial priorities than younger people. Their children are going to college and (yikes!) grad school; they generally have to spend more on health care; and they’re thinking harder about retirement.
“Really, the math has to work out for these people,” says Michele Markey, vice president of Kauffman FastTrac Inc. in Kansas City, Missouri, a nonprofit provider of entrepreneurial training.
In the first few years, new business owners can experiment and figure out whether they have what it takes to be an entrepreneur, says Eleanor Dillon, an Arizona State University assistant professor of economics and co-author of a study on self-employment dynamics published in February by the National Bureau of Economic Research.
If you’re an aspiring older entrepreneur, ask yourself these questions to decide if starting your own business is the right move:
- How does a business fit with my other financial goals? You should have a focused objective for your business and project how it’ll fit with your other financial priorities, Markey says. For example, how long will it take you to break even on your initial investment? Until then, your business is costing you the returns you could have made putting your money in a retirement account or some other investment.
- How am I going to pay for this? Along the same lines, you should determine if you intend to fund your business from your savings or seek outside funding, either equity investors or debt. It’s difficult to get financing to start a business from traditional banks, but there are a few options for startup funding in the alternative financing market.
- Should I start a side gig? Having an income while you develop your business will relieve some pressure, and it doesn’t hurt to hold on to health insurance if your employer offers it. If you’re under 65, the eligibility age for Medicare, you can buy individual insurance, but you’ll likely pay more on your own versus with an employer plan, and you’ll get less generous benefits.
- What’s my endgame? If you’re an older business owner, your commitment to the business shouldn’t be as open-ended as a younger person’s might be, Markey says. Do you want the business to just provide income, or do you want to leave something behind after you no longer can or want to run it? Your endgame matters because it will influence how you invest in the business and operate it.
- How do I learn more? Sure, tons of books and websites are devoted to business, but nothing beats sharing ideas with like-minded people. A good place to start is your local Small Business Administration small business development center. Also talk with people who would be your target customers to get feedback on your product or service. “Getting out and moving around amongst people gives the idea life,” Markey says.
Sheble adds: “Know that it’s going to take time. Unfortunately it’s going to take years” to ramp up a business.
Still, he’s nowhere close to hanging it up — there are more mechanics to hire, more contracts to book. And his take-home this year is only about half what he made in his last corporate job.
Sheble expects to “be working a lot more years,” so Arizona will have to wait a bit, he says. In the meantime, he’s still building his resume, four decades into his working life. He’s also having fun.
“Most of the time,” Sheble quips. “Let’s use the 80/20 rule and call it 80% of the time.”
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Andrew L. Wang is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @andrew_L_wang.
This article was written by NerdWallet and was originally published by USA Today.